Netflix announces first exclusive TV series deal

Netflix will be the only place to watch 'the most sought after premium series.' Competing more directly than ever with pay TV channels like HBO, Netflix is flexing its muscles with the new 26 episode deal.

Netflix Inc.'s Internet video streaming service will be the only place to watch an upcoming TV series with a high-powered pedigree that includes Academy Award-winning actor Kevin Spacey and the director of an Oscar-nominated film about Facebook.

The deal announced Friday illustrates Netflix's growing clout in Hollywood as its mines revenue from its 20 million subscribers to create new home entertainment options. In this instance, Netflix will be showing a series that won't have a scheduled broadcast time. Episodes could be released in bunches instead of just one per week.

"It's a show people will be able to discover over time," Ted Sarandos, Netflix's chief content officer, said in a Friday interview. "It doesn't have to happen over the first week, first month or even the first year of the show."

Netflix didn't disclose how much it is paying Media Rights Capital, the studio behind "House of Cards." The agreement covers 26 hour-long episodes, an usually large commitment for a series that hasn't even entered production. The series will debut on Netflix late next year.

The high-profile names connected to "House of Cards" made it a hot commodity. Besides featuring Spacey in his first regular role in a TV series, the pilot will be directed by David Fincher, a respected filmmaker nominated for a best-director Oscar for "The Social Network," a movie based on the legal battle pitting Facebook founder Mark Zuckerberg against his former friends and classmates at Harvard University.

This will mark the first time that Netflix owns the exclusive rights to an episodic series, an advantage that has worked well for pay-TV channels such as Time Warner Inc.'s HBO and CBS Inc.'s Showtime. HBO, with an estimated 28 million U.S. subscribers, has steadfastly refused to license critically acclaimed series such as "The Sopranos" and "The Wire" to Netflix's streaming service because of their intensifying rivalry.

In landing the rights to "House of Cards," Netflix demonstrated it has the financial muscle to outbid the more-established pay-TV channels.

"It was probably the most sought after premium series on the market now," Sarandos boasted.

The deal gives Netflix the flexibility of releasing "House of Cards" on DVD for subscribers who prefer getting discs mailed to them, but the company primarily wanted the series for its video streaming library.

Netflix has spent more than $400 million on streaming rights in the past year in an effort to expand the library's breadth and quality. Netflix wants to get more subscribers to watch video over high-speed Internet connections instead of waiting for DVDs to be delivered in the mail. The company, based in Los Gatos, Calif., prefers Internet streaming because it lowers its expenses on postage and handling.

There are more than 20,000 titles in the streaming library, but most of them are older movies and previously shown TV series.

Streaming nevertheless is becoming increasingly popular, so much so that Netflix now offers a plan that costs just $8 per month for people who don't want to rent DVDs. Subscribers who also want DVDs typically pay $10 to $20 per month, depending on how many discs they want to rent simultaneously.

Netflix's formula has been winning over fans and investors. In the past two years, Netflix has added more than 10 million subscribers and its stock has quintupled in value. The shares fell $4.50, or about 2 percent, to close Friday at $209.40.